Eduardo Fleury assesses the possible consequences of the new stage of the tax reform, which was presented by Minister Paulo Guedes to the National Congress last week

Reproduction/Câmara de Notícias AgencyAccording to the lawyer, the possible taxation of dividends also affects competitiveness with international companies

The new stage of tax reform worries businessmen and analysts for a possible increase in the tax burden on companies. The tax lawyer Eduardo Fleury says that the proposal submitted by the Minister of Economy, Paulo Guedes, the National Congress will harm institutions, mainly the taxation of dividends, which will “take away capital” and harm companies already “hurt” by the economic effects of the pandemic. “After the pandemic, when companies consumed savings due to all the difficulties they had, you take capital, because at the end of the day capital is withdrawn, because a portion of the profit is reinvested. When you take capital to be able to reinvest at this time, it is not the best time to do so, even if you will agree to taxation. This is not the time to tighten your belt, especially looking at companies that have been badly hurt. This discussion on taxation of dividends could be for later, when the companies are fully recovered”, said the tax lawyer in an interview with Jornal da Manhã, from Young pan, this Monday, 28.

Eduardo Fleury assesses that although the federal government has exempted micro and small companies from taxation, an analysis of data from the Internal Revenue Service shows that those who receive the most dividends were precisely the companies that were most affected in the pandemic. In addition, the lawyer also mentions that the possible taxation of dividends also affects competitiveness with international companies. “What competitive advantage will Brazil offer foreign companies to offset this very high cost? The government, in this sense, should review the proposal that taxes dividends on distribution abroad, because these dividends will also be taxed in the country of origin. But in other situations, this taxation of dividends should be reviewed, not only internally, but for when it is sent abroad”, he said, criticizing the proposal. “I don’t believe excessive taxation is a good way to go. You transfer the money from the entrepreneur to the government, to spend on consumption, not on investment. It is quite questionable”, he added, citing that the text will increase the final tax rate on investments from 34% to 43%.

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